External liabilities are under control

Posted by CRSD on 27/02/14
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According to international analytics, the situation with paying for external liabilities is quite manageable in Ukraine. In this regard, foreign bonds holders do not share concerns about a possible Ukraine’s default.

They believe it is corroborated by valuation of Ukrainian Eurobonds at international stock exchanges.

Thus, on the international stock markets Eurobonds maturing in June 2014 traded at 94.1% of face value, the dollar government bonds with maturity in 2023 – 86.5% of the face value.
International analysts point out, that, for example, before the 2001 default in Argentina, the reference price of 10-year government bonds fell to 25% of face value.
In 2008, the Ecuadorian bonds fell to 32%, after the country stopped payments of the national debt. The Greek bonds fell to 75% before restructuring and partial write-offs.
At the same time, according to Ukrainian experts, Ukraine is able to pay its external liabilities in 2014.
In 2014 Ukraine needs to pay out to foreign creditors about 6 billion USD, of which 3.74 billion USD is the debt to the IMF.
The only major payment to the Ukrainian Euro bond holders is to be made in June 2014.  1 billion USD must be paid off, with a coupon of 7.95%.
In January-February alone, Ukraine paid out to IMF around 1.03 billion USD. Another 1.4 billion USD will have to be paid out in the first half of the year.
Experts also note that, according to the State Statistics Service of Ukraine, in 2013, Ukrainian enterprises exported goods and services for a total of 77.8 billion USD. Thus, the external liabilities are equal to  only 9% of the total exports.
Both experts and investors are convinced that in 2014 Ukraine will receive international bailout in the amount of about 10 – 15 billion USD,  which would be sufficient for Ukraine to fulfill its external obligations in full, without having to restructure its foreign debt.
In addition, experts emphasize that  the Ukrainian external debt against GDP is not critical. This ratio does not exceed 40%, which is significantly lower that a debt burden of the Euro zone which  exceeded 91% as of January 2014.
In general, the State Budget 2014 envisions payouts of government liabilities in the amount of 134.4 billion USD, of which the main debt is 95.5 billion USD, debt service – 38.9 billion USD. In fact, the government will have to pay external liabilities (the main debt) in the amount of 36.3 billion UAH (at the average exchange rate of 8.5 UAH per U.S. dollar), and the internal ones – 59.2 billion UAH.

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Center for Research of Sustainable Development about the economic and political cooperation between Ukraine and EU and the perspectives of sustainable development in Europe. more.



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